‘The margins between success and failure can be as slim as a single chart position’ … The Hoosiers

'Things seem so obvious now," says Irwin Sparkes, the singer and guitarist of the Hoosiers, "but back at the beginning we thought we just needed to be this really solid live band, and have a following. We were so green – we thought, 'Well, we'll write a pop song, and that's it, isn't it?'"

"I imagine, in the glory days, that's how it should have been," agrees Sparkes's bandmate, drummer Al Sharland. "Even when we were growing up, it was all about live bands playing gigs and creating a buzz, then an A&R guy comes along and sees something he likes. Now, major record companies only take bands on at the very last step – much more like a big funding and marketing organisation than a record label."

Reeling from the perfect storm of digital distribution undermining its business model, and a series of spectacular PR own-goals as it responded, the recorded music industry looks to be in terminal decline. Yet while its problems are well documented, it's often difficult to get a sense of what it's like for the artists caught up in the turmoil.

On the face of it, the Hoosiers don't seem like victims of the music industry's implosion: the London-based band were given the full-on major label push in 2007, and sold a million records. Yet 2011 finds them on their own label, and wondering whether their old fans will remember them now they can no longer call on the promotional and marketing muscle of a major.

While their situation may not be typical – very few artists are given their own album back as a leaving present by their previous label – the band's experiences reveal some of the obstacles facing musicians in what is supposed to be an age of accessibility and democracy, driven by the internet. What they have found is that success is still dictated by a very small number of influential individuals, online presence remains no substitute for traditional media exposure, and the margins between success and failure can be as slim as a single chart position decided by a couple of hundred sales.

Although their first single, Worried About Ray, was a hit in 2007, the Hoosiers had spent a decade achieving their overnight success. Formed by school friends Sparkes and Sharland, plus bassist Martin Skarendahl, the group were spotted by producer Toby Smith, who worked with them to hone their sound and songs. Smith introduced them to manager Steve Morton, who, in 2006, began to shop the band around major labels. They were signed by Craig Logan, the former Bros bassist and head of Sony's RCA imprint, largely on the strength of the already completed Worried About Ray; Sparkes and Sharland were able to give up their day jobs – at Ticketmaster and Ladbrokes – and music teacher Skarendahl cut back his hours. They were cock-a-hoop.

"As a band, you kind of don't aim above getting signed," Sharland says. "You assume that once you're signed you'll become famous and rich. I remember Steve brought us back down to earth right away. He said: 'Look, this is where the hard work begins. There's about 40 or 50 bands who'll get signed this year, and maybe two or three will break through.' And those 40 or 50 were some great bands – we know a lot of them who got signed in that year and didn't make it."

The traditional music business pattern had been for a major label to sign an artist, then give them several albums to find a wide audience and develop a signature sound. Now, the risk-averse majors are looking for a financial return from the outset. If they were releasing their debuts today, it is likely that such redoubtable cash cows as U2, Bruce Springsteen and Queen would have been dropped after their first albums failed to become huge hits. Nowadays, even instant chart-topping success will buy very little time for an artist to develop.

The Hoosiers' second single, Goodbye Mr A, followed their first into the top five, and their debut album topped the charts. Although resolutely shunned by the cool-hunters of the print media – NME readers voted them the worst band in the world ("To be honest, it was flattering that someone hates you that much," Skarendahl says) – the band built a large and unusually devoted live following, with fans turning up to gigs dressed as characters from the group's quirky songs. To consolidate their success, they set about retooling their sound for the follow-up – but it took time.

"We were always told: 'Beware the big bad wolf of a major record company,'" Sparkes says. "We grew up with those ideas. Yet something we were acutely aware of was the individuals that made up the company, and I don't think I've met a lovelier bunch of people. There were no constraints put on anything artistically. We were almost left alone, because we had a couple of big hits at the beginning."

The band spent almost two years writing and recording their second album, and the results seemed promising. A single, Choices, saw them back on the radio despite abandoning the 60s and 70s references of their previous hits for an electro-tinged 80s sound, and even earned them some positive reviews. Released last August, it sold steadily, but not spectacularly.

"The impression we got is that after two years away we'd done well," says Sparkes. "We were really pleased. But it only got to No 11. And that wasn't high enough."

"It's really sickening how much those few chart positions matter," Sharland says. "If you get on the big TV shows you start hitting big audiences, and those big shows pick their bands based on whether they've had a top 10 or not. We were 11 in the midweeks, and pushing on No 10; there was a lot of tension in the record company, with people going: 'Oh, if it's a 10 it's easier to promote as a success.' It's all bollocks, really, and it shouldn't make any difference. But it does, apparently."

Interest in the Hoosiers within the company began to flag. Logan and other key supporters had left the label, and with the comeback single's failure to reach the top 10 and the album going into the charts at No 10 rather than No 1, RCA opted to cut its losses. Despite having paid to record and manufacture the album, and support the band through the two years it had taken to make, RCA cancelled the advertising campaign for The Illusion of Safety, and decided not to release a second single. In the counterintuitive world of the 21st-century record business, such seeming illogic is becoming a new norm – especially for bands, such as the Hoosiers, who were not signed on so-called "360-degree" deals, and who therefore keep their income from touring, merchandising and songwriting rather than paying a proportion of it to the label.

The Hoosiers' double stroke of good fortune was, first, that by the time they realised they had to leave RCA they'd already had hits and built solid foundations, and, second, that the label handed them back the master tapes to their second LP. The album, with four new tracks and a new title – Bumpy Ride – will be released next month on the band's own imprint.

RCA has an "override"– it will get a small percentage of whatever money the album makes – but, as Skarendahl points out, "that's a kind of irrelevant figure, because we've got the album back: and that's bigger than any percentage." They have a cash injection in the form of an advance from their music publishing contract. But from hereon in, every penny will have to count.

"We've made a bit of money and haven't spent it ridiculously, so we can keep paying ourselves a wage," says Sharland. "We haven't stretched ourselves – it's not like we suddenly all got massive mortgages – so we can pay ourselves less. I don't want to sound like we're complaining – we know how lucky we are – but the money will run out. We've quite thoroughly looked into getting independent financing, but there's a little bit of doubt about an album that's already been released, to all intents and purposes. At the minute we've got enough money just to tick along and go to radio and test the water with a single, and hopefully work from there."

The theory goes that the internet will help artists reach their audiences more directly and make for deeper connections between band and fan; but as yet, self-promotion via social media still lacks the impact of national radio play, and hiring a radio plugger is a must.

"For a pop band signed to a major, radio play is the be-all and end-all," Sharland says. "Careers can live or die on the decisions of [radio programmers]. Myspace and Twitter are more like currencies you go to radio with before people will play your record. You go, 'Look, we've had this many YouTube hits, we've got this many Facebook friends …'"

"It's all about reassurance," Skarendahl says. "People feel they're investing in something that's going to do well, because of all this reassuring currency."

Assuming luck runs their way, the radio plugger can keep the playlisters onside, and social media reminds old fans of the band's existence, the Hoosiers might be able to keep their career afloat. They are already spending more time on the business, and less on the music, but their ambitions seem modest.

"The aim is just to sell enough records to be able to do the next one," Skarendahl says. "That's always the plan."

"And we want to tour again," says Sparkes. "As a band it feels like you're slightly impotent when you're not touring, and we haven't done that for ages."

"Financial security's great, but the reward is to play live," agrees Sharland. "It sounds a bit cliched, but it's true. That's the buzz – that's why we started in the first place, to get up on stage and play."